By combining strategic research and in-depth industry knowledge, Unichem aims to transform itself into a global pharmaceutical drug company with an increasing focus on cutting-edge research and developed markets. We initiate a ‘BUY’ on the stock with target price of Rs 290 with medium to long term investment horizon.
Unichem Laboratories Ltd.
Unichem Laboratories Ltd. is an international, integrated, specialty pharmaceutical company. It manufacturers and markets a large basket of pharmaceutical formulations as branded generics as well as generics in India and several other markets across the world. In India, the company is a leader in niche therapy areas of cardiology, neurology, orthopedics and anti-infectives.
Unichem is ranked 26th in the domestic formulations markets as per AWACS MAT December 2015 and is amongst the top #18 companies in representative (covered) market. The company’s 4 brands are being featured among top 300 brands.
The company has registered decent results for the quarter ending December 2015. The standalone revenues grew by 15.2% to Rs.306.26 crores vs. Rs.265.85 cr. in the year ago quarter. Operating profit zoomed at Rs.34.10 crores as against Rs.8.44 crores in the corresponding quarter last year. The adjusted net profit (before exceptional item) surged manifold at Rs.23.32 crore as against Rs.2.06 crore.
The price growth is around 7.5% to 8%, growth owing to new product is around 3% and the balance is on account of volume. Cumulative filings of ANDAs stood at 35 of which 20 ANDAs are approved (including 1 tentative approval). And Cumulative filings of DMFs stand at 43. The company has done two launches in the recent quarter ended and has entered into the Gliptin market by launching Teneligliptin.
With strong traction in the US markets, focus to entry in new geographies, increased business driven by volume growth and continued dominance of key products of Unichem depicts the growth path of the company in times ahead. We believe the company is trading at an attractive valuation at 18.67x and 14.87x of consolidated FY16EPS of Rs.11.71 and FY17EPS of Rs.14.71. We initiate a ‘BUY’ on the stock with a target price of Rs.290 (appreciation of about 33%) with the medium to long term investment horizon.
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